All posts by jimmybob

The HERD

Sometimes you need to step back from trading for a minute, realize your are human... a mammal actually, then go back to your desk and trade accordingly. What does this mean? Well lets take a look at one of the more common behaviors of a mammal... herding. We all know what a herd is. Lets look at the definition more closely:

When an association of animals (or, by extension, people) is described as a "herd", the implication is that the group tends to act together (for example, all moving in the same direction at a given time), but that this does not occur as a result of planning or co-ordination. Rather, each individual is choosing behaviour that corresponds to that of the majority of other members, possibly through imitation or possibly because all are responding to the same external circumstances.

 

 

Now take a look at a stock like GOOG (GOOGLE) over the past few days. Yes, it did break to new highs recently. But yesterdays sell-off, and todays weakness is more folks following the herd then anything else. Sometimes following the herd can be very profitable, if your looking for long term holds. But as a short term trader, following the herd can be very frustrating.

Timing the herd is the key to profits. This means finding where GOOG will bounce off support and get in before the herd takes it to $700+. That may have happened today, as GOOG bounced off its 50DMA on high volume.

We are going long the calls. Check out our chatroom for the trade ideas.

The chat room will be available to ALL registered members throughout the month of January! Be sure to register before February as a Chat or Options Education Member in order to continue enjoying the chat after this month!

 

 

SINA (SINA.COM) / GMCR (Green Mountain Coffee Roaster, Inc.)

Seems like all the beaten down, piece of shit stocks want to run today. SINA (SINA.COM) is a beaten down china ADR that is getting some legs on the FMCN news today, just like all the other ADR's. SINA (SINA.COM) does have a tendency to explode after being beaten down, like it did in October. SO play accordingly.

 

 

GMCR is continuing its breakout today, after getting an afternoon pop yesterday. Looks like a combination of some NPD rumor news, as well as short covering??? Hate the stock, but play the play, and GMCR can be profitable trading on both sides.

Volatility is an option players friend!

Happy Trading!

DNDN (Dendreon Corp)

We wrote about DNDN in early December, after they released news of a royalty sale for $125 million. Sometimes that can be the sign of a desperate company, especially one that has been burning through cash at a high rate. But we thought the opposite and that the calls would be a nice play going forward, as we wrote here.

DNDN
DNDN

Turns out those have been quite a profitable trade, as DNDN has surged more then 50% from the December lows closing at $13.31 today. It's anyones guess if this current 3 day monster run continues on the pre-announcement of "better-than-forecast fourth quarter 2011 revenue ". DNDN still has a questionable future, and will be in trouble if its only revenue driving drug fails.

For now, its best to play the hype, and lock in profits when you can. Its usually the people looking at the chart, waiting for a retest of the stocks highs, that are holding the bag a few weeks later wondering what happened.

Figure short term top of $15-17 to lock in profits, and hold some calls for possible $20 test.

dndn 1-9
dndn 1-9

 

PRX (Par Pharmaceuticals) – On the Move

PRX was a company i followed over the past few years. A generic drug company, that i think one day will trade north of $50. During a presentation today, they noted higher margins and possible upside revisions to guidance. I think this stock is currently undervalued, and should see $40 in short order.

The company sees 2012-2014 CAGR for revenue of 8%; sees CAGR for cash EPS of 15%. The company says potential opportunities for upside to its three-year guidance exist, including new AG partnerships, potential acquisitions, less erosion of base generics than expected, and better pipeline production. Information taken from investor day slide presentation.

Chat Room members were alerted to the $35 Jan 21st calls @ .35.

Lets see if we get some breakout volume as the stock is currently above the Moving averages and upper bollinger band.

DECK (Deckers Outdoor Corporation) up 4.61% today

On a day when the market was mixed, DECK (Deckers Outdoor Corporation) rose 4.61% on double its average trading volume. Of course I could be arrogant and think folks bum rushed the stock based on my rosy analysis last night. It is also quite possible, that some hedge fund managers watched Al Rokers frigid north east forecast, and decided it was time for folks to buy the boots, so they bought the stock.

Either way, DECK was a money maker for those who played it today. We brought the $90 calls up as a great risk vs reward entry @ .60, and they closed at $1.10.

DECK still looks to have some room to run, and the $90 area should be hit in short order.

DECK

Much more to come on DECK...